CIO OUTLOOK 2021 From short-term economic recovery to long-term sustainable growth - Alternative Views
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CIO OUTLOOK 2021 From short-term economic recovery to long-term sustainable growth July 2021
CIO Outlook 2021 From short-term economic recovery to long-term sustainable growth
TABLE OF CONTENTS
04
Riding the
12
The US
CIO OUTLOOK
SECOND HALF
OF 2021: OPTIMISM
recovery and China
rollercoaster BOOSTS ASSET
PRICES
08 16
One look at key equity benchmark indexes
tells much of the story of the first half of
2021. Shares have surged and confidence
is back. Any worries that investors have
Private markets Sustainability overreacted to the pandemic crisis have
– lessons in now receded. If anything, there are
resilience concerns that too much optimism is priced
in. The word bubble has come to the
surface again. This applies to the private
markets as much as the public.
10
Corporate
18
Beyond Covid-19:
Corporate earnings have soared, but valuation multiples
have also risen. Some optimism is clearly justified: the rollout
of vaccination programmes in most of the world’s major
economies has helped bring the pandemic under some sort
of control. Following lengthy lockdowns, many countries are
now largely open for business.
megatrends the opportunity set
Economies are rebounding sharply after suffering sharp
contractions. The US grew at an annualised rate of 6.4% in
the first quarter of this year, building on a 4.3% gain in the
fourth quarter of 20201. This follows the record-breaking surge,
and record-breaking slump, of earlier quarters in 2020.
At Tikehau Capital, we are systematically scouring the markets
– including geographies, asset classes, and sectors – to identify
where value remains hidden and where too much optimism
has been priced in.
1
US Commerce Department, as of June 24, 2021
2 3
CIO Outlook 2021 From short-term economic recovery to long-term sustainable growth
RIDING THE RECOVERY
ROLLERCOASTER
Economic growth across the world has swung from one Central banks’ balance sheets have also ballooned. In the
extreme to another in the past 18 months as governments US, the Federal Reserve’s balance sheet has expanded to
first imposed stringent lockdowns and then tentatively $8trn through asset purchases, reaching the equivalent of
explored reopening. approximately a third of the country’s economic output. In the
Eurozone, the ECB total balance sheet is circa €7trn – about
The world’s biggest economy, the US, exemplified the 60% of the euro area’s GDP5.
rollercoaster ride that was 2020. The economy shrank dramatically
at an annualised rate of 31.4% in the second quarter. It then Global debt levels have reached extreme levels: there is an
rebounded, with a record-breaking gain of 33.4% in the third estimated $275trn of debt outstanding worldwide – equivalent
quarter as stability returned and some activities resumed2. to 365% of global GDP6. In this context, converting debt into
capital will be an important topic.
The statistics are now less volatile, but 2021 first-quarter growth
of 6.4% brings US GDP in absolute terms to 0.9% below its pre- Inflation
COVID level. The US economy is expected to have recovered
fully by mid-year, confirming the fastest-ever economic Inflation, on the face of it, is back with a vengeance. The
recovery – following the shortest ever recession – in US history. US Consumer Price Index rose 5% for the year to May7, the
Consumers have pent-up spending power, while household biggest rise since 2008. Inflation is rising in other economies,
income did not contract in 2020 despite the recession. This too, including the UK, as consumers look to spend money
was largely due to massive stimulus programmes. they could not during lockdowns.
The situation is similar in Europe, where the region’s economy For now, markets are accommodating these higher inflation
contracted by 6.6% in 20203 but household revenues were numbers because they believe inflation is temporary.
up – an unprecedented dichotomy.
However, if inflation is not temporary, we face a potential
Elsewhere, things are becoming more complex. A slowdown disruption in the alignment of interest between central banks
in China was expected as monetary and fiscal policy is not as and governments. For the last three decades, central banks
accommodative as elsewhere. China follows its own agenda, and governments have been aligned in their push for lower
looking to soften domestic credit growth. interest rates on the back of strong deflationary pressures
coming from globalisation and demographic trends.
Brazil and India are still suffering from Covid-19 disruptions,
accounting for disappointing growth numbers compared with If inflation persists, however, we could see central banks trying
expectations. Brazil recently became the second country in the to fight it while governments welcome the potential to inflate
world, after the US, to register half a million Covid-19-related deaths. debt away. This could create tensions between institutions
and volatility in markets.
Governments worldwide have committed $16trn to combat the
effects of the pandemic, consisting of $10trn of spending and
$6trn in state guaranteed loans. This commitment represents
20% of global GDP, an astonishing sum4.
2
US Commerce Department, June 24, 2021
3
EU’s Statistical Office (Eurostat), March 9, 2021
4
Bloomberg, October 2020
5
Bloomberg, June 2021
6
Reuters, February 2021
7
Bureau of Labor Statistics, June 24, 2021
4 5
CIO Outlook 2021 From short-term economic recovery
to long-term sustainable growth
Booms and bubbles
Asset prices are at or close to all-time highs on a variety of • Extreme valuations – as outlined above, many markets are This last category is more favourable to economies as the
measures and metrics. trading at historic extremes. associated assets and infrastructure remain even once the
bubble has burst, whereas with the other two categories,
Approximately 80% of all fixed income securities now trade with • New paradigms to justify valuations – the emergence of once the bubble bursts, nothing remains.
a yield of less than 2%. European and US high yield indexes acronyms like EBITDAC (earnings before interest, taxation,
are close to record-low yields. depreciation, amortisation and coronavirus) suggest While the signs of a bubble are there, it is not clear exactly what
investors are attempting to justify expected higher revenues kind of scenario we are in currently. The Covid-19 crisis shows
In equities, global market capitalisation has crossed the and earnings despite a lack of certainty. Different definitions that the digital economy will prevail, but at the same time some
$100trn mark for the first time ever and its ratio to GDP is at of ‘adjusted earnings’ and the wider use of the ‘rule of 40’ – of the technological economic models seem to exhibit bubble
115% - $105trn global market cap versus $91trn global GDP. coined by venture capital investors – are also warning signs. features. Is the fever for bitcoin and other cryptocurrencies
In the US, the numbers are even more spectacular: the market like that seen with Tulipmania in the Netherlands in the 17th
capitalisation to GDP ratio stands at 230%, 90 percentage • Instances of fraud, operational accidents, and one-off large century? Or will it be more like railroad industry’s boom in the
points above its long-term average. The S&P 500 in the US losses in financial institutions are happening more and more 19th century, leaving behind an asset that will stay to boost
and Stoxx 600 index in Europe are also at all-time highs in frequently, suggesting that all is not going as smoothly as productivity even aftewr the bubble has burst?
absolute terms and multiples8. investors believe below the surface.
SPACs
In 2020, the number of stocks that had risen by more than • Extreme retail activity in stock trading
400% year-on-year was three times higher than any year of The recent flurry of interest in special-purpose acquisition
the previous decade9. The signs are there – but where can we expect to see a bubble vehicles (SPACs) started with the acceleration in the pace
manifest? Academic research indicates that a bubble can of asset rotation in public and private assets. Such vehicles
Meanwhile, private equity transactions are closing at around happen on three types of assets: on the surface seem to be a good way to park cash when
11x EBITDA on average, an all-time high10. rates are low or negative. As such, they can look like another
• Rare assets such as land, gold, tulips – or bitcoin. demonstration of a bubble situation.
Does this mean we are in a bubble situation?
• Assets that are perceived as a game-changer for the world However, SPACs can also be seen as another bridge between
It is always difficult to assess whether a market or markets economy, such technology in 1999-2000, and arguably China. public and private markets, improving the efficiency of the
are in bubble territory, as bubbles are best assessed after private-to-public transition.
the fact. However, there are several indications that we are • Assets perceived as boosting productivity: railroads,
approaching such a situation. telecommunications, the internet - and data. Private equity funds can take companies to market through
initial public offerings (IPOs), remove them from listed markets
through buyouts and takeovers, or buy spin-offs from listed
companies. Listed companies can also bring private companies
to the public markets through purchases.
SPACs are an alternative to these well-established routes.
Management teams are mandated to select private companies
and bring it fully or partially to the public market. This can be
useful if interests with SPAC investors are aligned.
8
Bloomberg, June 2021
9
Wall Street Journal, January 2021
10
Bain Private Equity Report, March 2021
6 7
CIO Outlook 2021 From short-term economic recovery to long-term sustainable growth
Broadening the investor base Debt to equity conversion
People want their investments to make sense. They want to Debt is piling up everywhere and capital is missing. At Tikehau
be proud of how their money is used to finance the economy, Capital, we believe opportunities lie within the area of debt-
create social inclusion, and fight climate change, for example. to-equity conversion.
These desires are driving a new increase in interest in private In a globalised world, companies can optimise the amount
markets assets from individual and retail investors as they seek of capital they operate with in order to boost their return on
out impactful investments such as venture capital, that can equity, in an economic model based on short-term growth.
more clearly demonstrate a tangible outcome than traditional For example, share buybacks financed by debt have helped
equity or bond funds. to boost shareholder returns.
The US is leading the way in facilitating retail investors to When the Covid-19 crisis cut short-term growth, corporate
allocate to private assets. This is in part because risk appetite is capacity to fund share buybacks and similar initiatives vanished.
greater in North America. However, Europe is rapidly catching Governments have been obliged to provide rescue financing
up in such respects and Asia is also on the move. to companies lacking capital.
PRIVATE MARKETS – At Tikehau Capital, we are working on several projects to allow It is inevitable that corporate debt will need to be converted
LESSONS IN RESILIENCE non-professional investors to gain access to some appropriate
areas of private markets.
into equity in some way. Just like banks after the 2007-09
financial crisis, companies will probably be more constrained
to operate with capital buffers that will be a headwind to short
The rhetoric from governments that savings should finance term optimisation. Furthermore, companies will need to invest
The first true test of private debt • Inside the asset class, capital has been efficiently companies that create jobs has become more widespread to adapt to the post-pandemic world and remain competitive
reallocated towards sectors identified as being pandemic in Europe in the wake of the Covid-19 crisis, which exposed despite less-than-optimum capital positions. Reshoring of
Private debt markets have opened up dramatically in the years ‘winners’. Transactions have concentrated on resilient flaws in global supply chains. supply chains, digitalisation, and the energy transition – among
since the financial crisis of 2007-09 as banks have withdrawn sectors such as software, digital, advisory, healthcare, other things – will require investment.
from the market and asset managers have stepped in. Demand and the ‘silver economy’. In the wake of the pandemic, a more locally focused economy
for diversifying assets and income from pension schemes could improve corporate resilience to supply chain shocks. Demographic factors could also trigger an additional need for
and other asset owners has fuelled significant inflows into • A private debt secondary market has emerged, allowing However, these companies still need to invest to adapt and capital. The global working-age population is shrinking, and
the asset class. both limited partner-led and general partner-led operations to reinforce this resilience, likely through non-organic growth. a diminished labour force in decades ahead may have to be
that could boost the efficiency of the asset class as well as Local financing of companies that people know and feel close compensated by more capital.
However, before the pandemic hit, it was widely agreed that providing interesting investment opportunities to investors. to is a theme that encourages non-professional investors to
private debt still had to prove its resilience as an asset class Highly diversified, fully deployed portfolios can be bought consider financing their local economies. We believe addressing this necessary conversion of debt into
by going through a full economic cycle. It has done this – and at a discount. capital makes sense through strategies focusing on special
come through the test with flying colours. This resilience has New vehicles in Europe are emerging that appear to allow this financing, such as preferred equity or private convertible capital.
come from several factors: • Direct lending instruments usually take the form of floating- increased access to private assets. These include unit-linked The trend will be strong – and we have several strategies
rate debt, making this asset class an interesting value products in life insurance contracts, the European Long-Term available to seize the opportunity.
• Its flexibility to adapt to an extreme situation. Being the proposition if inflation picks up. Including direct lending Investment Fund, known as ELTIF, and expanding use of
sole lender allows covenant renegotiation, waivers, and in a fixed income asset allocation in the context of higher multi-asset strategies allowing access to a diversified pool of
easier restructuring. interest rates makes sense, as those instruments embed private assets.
mainly credit risk and almost no duration risk.
8 9
CIO Outlook 2021 From short-term economic recovery to long-term sustainable growth
CORPORATE MEGATRENDS
The old and the new in tax rates. The US and the UK have helped to initiate the
move – despite being among the most aggressive in cutting
The global working population peaked in 2012. In 2001 the taxes in recent years.
inclusion of China in the World Trade Organization doubled the
global workforce available, creating the biggest labour shock In addition, the decline of globalisation means less ability to
ever in human history. This phenomenon, combined with produce where costs are low, to pay taxes where rates are
globalisation and deregulation, has injected massive deflationary low, and to optimise capital through share buybacks financed
forces into the global economy over the past 20 years. Central by debt. This means that strong headwinds will blow against
banks have been credited with defeating inflation, but they were corporate earnings growth.
arguably less of an influence than demographics.
Just as in a cycling race, when a tailwind blows, the whole
This trend is now reversing as the Chinese population ages. peloton benefits, so it has been with the recent reign of market
The global working population has been contracting since 2012 beta. When the headwind comes, only the best racers keep
and, combined with less globalisation and the emergence of performing – so it will be with the return of alpha generators.
trade tensions, this is highly inflationary on a long-term horizon. In a world with lower growth, higher debt levels, higher rates
and taxes, the companies with the best management teams
There is another megatrend that is reversing at the same time: and governance will outperform. Among the others, there
corporate taxes. In 1980, the average corporate tax rate globally will be a lot of ‘zombies’ and ‘value traps’, destroying value
was 46%. In 2020 it was 25%11. This change has provided and leading to the misallocation of capital. These companies
companies with a strong tailwind for the past 40 years. risk dedicating too much of their free cash flow generation to
repay their debt.
In the next decades, corporate taxes will be forced to increase
as governments seek to finance the $16trn spent to fight the This is not a bearish view. There will be a lot of opportunities in
global pandemic. such an environment. It just means investors must be hyper-
selective in picking assets. In a world where central banks
The recent G7 decision to implement a minimum corporate and governments are all trying to maintain high asset prices,
tax rate of 15% is a significant step in reversing the decline dispersion is the new form of correction.
11
Tax Foundation, December 9, 2020
10 11
CIO Outlook 2021 From short-term economic recovery to long-term sustainable growth
THE US AND CHINA
President Biden’s new deal on infrastructure Biden’s plan aims to reward industries that create jobs at
home, support US manufacturing, reduce carbon emissions,
The US is suffering from decades of underinvestment. improve living standards for the disadvantaged, and maintain
Infrastructure spending by state and local governments has the US’s technological lead over China.
steadily declined over the past few decades from a high of 3%
of the nation’s GDP to less than 2% in the past few years. This This last part is particularly interesting and contrasts with
is less than half the proportion of many growing economies. Roosevelt’s New Deal of 1932. While Roosevelt also focused on
domestic issues and creating jobs, Biden’s spending plan refers
In contrast to much of the developed world, the US has relied to the strategic competition with China, calling for investment in
on federal, state, and local governments, rather than the private research and development in semiconductors, batteries, and
sector, to finance large-scale infrastructure projects. broadband technology in an international context.
The tax-exempt municipal bond market has been the financing The key to successful implementation of the Biden plan will
tool of choice for state and local governments, but the pandemic depend on how effectively states and municipalities can
has brought financial stress, and state and local governments respond and ultimately deliver on infrastructure projects,
might have to rely on other options in the future. Tax revenues especially on a large scale beyond routine upgrade work.
are down and deficits are growing, making it more difficult for
states to continue their approach of relying on tax increases Public capital budget processes are iterative and lengthy.
or public bonds to finance and operate infrastructure. The availability of funding will be the deciding factor between
what gets implemented and what does not. Funding can
President Joe Biden’s $2trn infrastructure investment plan be optimised by applying creative and innovative financing
vows to be transformative. It addresses the need to modernise solutions. Alternative delivery mechanisms like privatisation
highways, bridges, tunnels, and broadband access across and public-private partnerships can leverage the Biden plan’s
the US – something for which the country has been crying federal and government dollars and bring benefits to investors
out for years. as well as US citizens.
The aim to do it all sustainably, emphasising climate-related The green revolution
priorities, is significant. It would go beyond the traditional
approach of fixing highways and transit and seize the When it comes to adapting to the move away from fossil
opportunity to build a more resilient, sustainable economy fuels towards greater uptake of renewable energy sources,
– one that will put the US on an irreversible path to achieve Europe is undoubtedly in the lead – but the US and China are
net-zero emissions, economy-wide, by no later than 2050. catching up quickly.
The spending will be spread over the rest of the decade and For the US, the energy transition is a crucial topic for several
will be paid for over 15 years by raising the corporate tax rate reasons. First, it is one of the ways in which it can maintain its
from 21% to 28%. The Trump administration lowered the rate position as a global superpower, through leading by example
from 35% to 21%. at a time when China has also engaged in the energy transition.
12 13
CIO Outlook 2021 From short-term economic recovery
to long-term sustainable growth
The energy transition also represents a strong business One positive from reducing dependence on fossil fuels would
opportunity for US firms, particularly those with strong be to reduce oil imports mainly from the Middle East. On top
innovative cultures and those at the cutting edge of of its own energy independence, China also wants to ensure
technological developments. food security, a massive issue that could threaten the regime
if it is not addressed.
In addition, The Biden administration wants to create more jobs
through its infrastructure plan, meaning additional investment On economic policy, China’s response to the crisis has been
will be needed to retrain workers in the fossil fuel sector. very different from other developed countries. China was the
only developed economy with positive real interest rates and
Finally, the energy transition will provide an alternative to the positive GDP growth in 2020.
shale oil and gas industry. This sector is struggling, although
it has improved US energy independence. The successful During the last 20 years China has been accused of printing
development of onshore clean energy sources can help money and injecting liquidity to sustain an economy in massive
maintain the US’s energy independence. overcapacity. Meanwhile, the US and European Union have
embarked on budgetary and monetary experiments to
As with Europe, the energy transition was a niche sector three stimulate final demand.
years ago but has now become a strategic tool of economic
policy to make local economies more resilient, putting this Western governments spend money while the Chinese
sector at the heart of the economic recovery. As well as authorities move in the opposite direction, which should
representing a massive business opportunity it will also be confirm the strength of renminbi. This is not a coincidence.
an instrument of soft power. The US cannot afford to lag The Chinese population is ageing, so China cannot continue to
Europe and China. build its growth model on a competitive workforce producing
goods for the world that are exported, driven by a low-cost
China’s goals for economy and climate change workforce and a massively undervalued currency. It needs to
switch to a growth model based on domestic consumption,
This year marks the 100th anniversary of the creation of the importing goods and services – and this is happening.
Chinese Communist Party in July 1921 in Shanghai, led by Mao
Zedong and 12 other founding members. Modern China wants China aims to become the leading Eurasian economic
2021 to be a year of stability following the pandemic, but also superpower. To achieve this, China needs to impose the
wants to take a step towards global leadership, targeted for renminbi as a reliable trade currency, develop a deep and
2049, the 100th anniversary of the People’s Republic of China. transparent bond market, and open capital markets further
to attract financial flows.
China’s new five-year plan issued in January 2021 has
two priorities: independence and the energy transition. The It is worth investors watching this area closely. A weak
government has committed to becoming a zero-carbon Chinese currency has proven highly deflationary as it helped
economy by 2060 and wants to build an image of leadership fuel globalisation. A strong renminbi will be highly inflationary.
on climate change, a topic that has attracted so much attention
in recent years.
14 15
CIO Outlook 2021 From short-term economic recovery
to long-term sustainable growth
Cementing real estate sustainability
Cities serve numerous social and economic purposes in a
single location, as opposed to suburban and rural areas, which
typically specialise economically. This will probably not change
post-Covid-19, but cities will have to evolve.
The trend is towards mixed areas. Areas reliant on offices
are not in fashion any more, as remote, flexible and hybrid
working patterns have rapidly become the norm. Quality of life
is better when a district caters for every use. In those areas,
the increased quality of life creates opportunities for investors:
building a mixed-use community opens the possibility of
investment in residential, offices, retail, and dining. It therefore
allows investors to realise the optimal function of each space
and mitigates risk across the spectrum of property types.
SUSTAINABILITY Take the Nicholsons Shopping Centre in Maidenhead, England,
which Tikehau Capital purchased in 2019. It was largely
A flight path to resilience next 15 to 20 years, makes sense to us. Zero-carbon planes dedicated to a dying asset class: the retail shopping centre.
will be flying in less than 15 years. The supply chain has to We began its conversion to a primarily residential area, with
A fall in globalisation will likely mean shorter supply chains adapt to this revolution. office space and ground-floor retail. This unlocked its best
and reshoring of manufacturing. This will go hand-in-hand use – foot traffic from the residential and office areas helps
with higher labour and production costs for companies and This is the goal of a strategy mastered by ACE Capital dedicated to retail, while office and retail spaces make living there a more
reduced ability to optimise taxes. making the European aerospace supply chains more resilient. The manageable and enjoyable experience.
Spanish government has just announced a similar strategy – with
In addition, the demographic long-term trend will amplify the Tikehau Capital as a partner, alongside SEPI, Airbus and Indra. Urban centres also create economies of sustainability. They
shortage of available workers. To remain competitive in such enable carbon-free transportation with bikes, or carbon-
an environment, companies need to invest massively in two Digitalization and the energy transition are two natural sources efficient transportation through subways and buses. Efficient
directions: digitalisation and the energy transition. Both can of value creation in this sector. They have become strategic living is enabled in terms of space and heat. Through such
allow companies to mitigate the rising cost of labour with areas, sitting at the heart of an economic recovery in Europe. modern cities, residents can engage in a more environmentally
existing, proven technologies. conscious lifestyle while investors can reduce the environmental
More broadly, this is part of a larger theme that marks the footprint of their real estate portfolios.
Let’s take an example: The aerospace industry, which was comeback of capital expenditure in a less optimised world that
enjoying a megatrend of growth for decades, has been needs to reshore, transform, reallocate and convert production The sustainability of a city is also amplified by mixed-use strategies.
decimated by the Covid-19 pandemic for obvious reasons. capacity to adapt to the post-pandemic situation. All this must When someone can walk to work, then to dinner, and then back
In Europe, hundreds of mid-sized companies manufacturing be done while creating jobs to address rising inequalities home, three opportunities to pollute have been eliminated.
high tech components for aeroplanes and helicopters have exposed by the pandemic.
been severely affected by the crisis. This sector is strategic for The rise of ‘smart cities’ is also an attractive area with
Europe, being a significant provider of jobs and a significant In this context, bringing patient stable capital to mid-sized technology enabling energy efficiency, low carbon mobility,
positive contributor to the EU trade balance. companies and creating jobs and growth is absolutely crucial and better regulation of flows and traffic.
for governments. It is not only an economic challenge but also
Investing in aerospace to bring long-term stable capital, helping a social one – and hence a political one. At Tikehau Capital,
both the consolidation of a fragmented but strategic supply we believe that growth equity is the most promising segment
chain and a rapid transition towards low-carbon mobility in the of the private equity universe for these reasons.
16 17
CIO Outlook 2021 From short-term economic recovery to long-term sustainable growth
BEYOND COVID-19:
THE OPPORTUNITY SET
A quartet of ideas special opportunity investment strategies and private debt
strategies investing in hybrid instruments (mezzanine,
We are convinced that asset price dispersion is the new form preferred equity, private convertible bonds), long term
of correction. As such, being highly selective and disciplined equity expertise investing in listed mid-cap stocks, or
when investing in any sector, geography, or asset class will be private equity strategies with a strong sectoral angle and
a key factor of success for the years to come – arguably more a clear mission to make a sector more resilient.
so than asset allocation or portfolio construction.
• Asset conversion. The K-shaped recovery will affect
The post-pandemic recovery will be characterised by real estate and infrastructure, notably those with a
significant debt burdens and a ‘K-shaped’ recovery as need for conversion. This includes converting shopping
winners and losers emerge. malls or industrial sites into mixed areas of residential,
offices, and retail. It also includes converting fossil fuel-
In the years to come, companies will face higher labour costs, linked infrastructure into greener facilities. We address
higher interest rates and higher taxes. They will be forced to this opportunity through equity and debt investments, in
operate with larger capital buffers. To remain competitive, value-add real estate, infrastructure and special situations.
companies from all sectors will have to invest massively in
two areas where existing technologies already allow significant As well as these megatrends, we also see opportunities in
cost efficiency. Asia and asset management.
Tikehau Capital offers many strategies through which investors Two thirds of the world’s population lives in Asia, a continent
are able to take advantage of the megatrends we have observed. rapidly becoming a world leader in many ways. China’s
consumer spending will outpace that of the US in absolute
• Digitalisation of processes and supply chains. We term by 2024, making the Chinese consumer one of the main
address this opportunity both through a dedicated private growth providers globally.
equity growth strategy and by investing selectively in
companies providing these services in private debt, liquid The rise of a middle class in highly populated countries like India
credit and listed equities. and Indonesia accelerates this trend with global effects. We
address this opportunity through dedicated Asian investment
• Energy transition. We address this opportunity through strategies in private equity as well as selected investments in
a group of strategies dedicated to financing the energy real assets and liquid credit.
transition in private equity and infrastructure, but also
through impact investment strategies in liquid credit and Asset management is one of the most fragmented sectors
private debt. globally with around 25,000 companies worldwide, of which less
than 1% are listed. The sector is undercapitalised but is growing
• Debt to equity conversion – as well as bringing fast. Because the sector is allocating world savings to finance
additional capital to mid-sized organisations that represent the economy and create jobs, as well as supporting the energy
a significant percentage of jobs in North America and transition, it is highly strategic. Consolidation has to happen and
Europe. We address this opportunity in different ways: well capitalised players can address this opportunity.
18 19CIO Outlook 2021
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your financial adviser or in any other fiduciary capacity.
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reliable indicator of future results.
Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions and beliefs of
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